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Why Chennai for Outsourced Services?

India ranks first among the Top 5 Offshore outsourcing nations in the world, as is evident by its ranking in Tholon’s Study on Destinations for Outsourced Services across the globe. India is undoubtedly the most mature and established offshore nations today, being blessed with almost 3.5 million non-technical graduates, and over 500,000 technical graduates being churned annually. Most importantly, it possesses a huge percentage of young population, many of whom continue to aspire to be a part of the outsourcing industry. The evolution of India towards the forefront of the outsourcing world started when the country was primarily a back-office destination that was tapped to offset peak (demand) periods for software development firms and Contact Centers in Western economies. The country has come a long way since then, and long strides have been taken in infrastructure and incentives to further stimulate its outsourcing industry.
Interesting drill-down information available from the Tholon Study pertains to the Top 8 Global Outsourcing Cities of the world, of which 6 are Indian Cities. Amongst the Indian cities categorized as hotspots of outsourcing, each city appears to have a strong association with a specific set of outsourced functions in various domains, as captured below:

Location

Traditional Area of Specialization

Banglore

ADM

Business Analytics

Contact Centres (English)

Engineering Services

Finance & Administration (F&A)

Healthcare

HR

Product Development

R&D

Testing

Chennai

Application Development & Management (ADM)

Business Analytics

Contact Centres (English)

Engineering Services

Legal Services

Product Development

Delhi /National Capital Region

Business Analytics

Contact Centres (English)

Infrastructure Management Services

Mumbai

ADM

Business Analytics

Contact Centres (English)

F&A

Health-care

Legal Service

Hyderabad

ADM

Health-care

Testing Service

Pune

Engineering Services

R&D

Chennai is second only to Bangalore, in terms of the specializations in the outsourced services domain.

Chennai also boasts of a vibrant and diverse economic base anchored by automobile, software services, hardware manufacturing, health care, and financial services industries, and is estimated to grow to USD 100 Billion by 2025. Chennai is also the second largest software and services exporter in India (second only to Bangalore), and contributes around 40 % to Tamil Nadu’s GDP, the state for which it is the capital city.

There are several factors that make Chennai a favoured destination for outsourcing:

Availability of young, good quality, English-speaking talent pool – Chennai boasts of a balanced mix of educational institutions (both technical and non-technical) which produce more than 75,000 engineers, of which 35,000 are IT Specialists. Combined with the traditional specialization on a wide set of outsourcing domains, Chennai is well positioned for the outsourcing companies to tap into this vast manpower base.

Competitive Cost Package – Depending on the specific skill set, resources are available in Chennai at a cost base between USD 200 – 300 per month. Labour cost alone cannot tilt the balance in favour of any location. However, Chennai boasts of the following advantages:

Infrastructure scalability

Quality real estate at reasonable costs

Robust urban infrastructure

Effective governance

All these advantages combine to make Chennai an attractive package from an overall operational cost perspective.

Global Outsourced Service is a continuously evolving business area, and there are new locations which are identified for newly identified areas of outsourcing. However, with Chennai having established a wide skill base, it is likely to remain a favoured outsourcing destination to many large global organizations.

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